DoD's $18.1M grocery contract with Quaker Oats shows limited competition and questionable value

Contract Overview

Contract Amount: $18,142,914 ($18.1M)

Contractor: Quaker Oats Company, the

Awarding Agency: Department of Defense

Start Date: 2010-07-01

End Date: 2010-09-30

Contract Duration: 91 days

Daily Burn Rate: $199.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - MISCELLANEOUS GROCERY

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60661

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $18.1 million to QUAKER OATS COMPANY, THE for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. The contract awarded to Quaker Oats Company for miscellaneous grocery items represents a significant expenditure. 2. The procurement method, 'NOT AVAILABLE FOR COMPETITION', raises concerns about market fairness and potential overspending. 3. A short performance period of 91 days suggests a tactical or emergency need rather than a long-term strategic acquisition. 4. The fixed-price contract type offers some cost certainty but may not reflect the best possible pricing due to limited competition. 5. The absence of small business participation is noted, with no set-aside or subcontracting requirements indicated. 6. This spending falls within the broader category of wholesale trade for grocery products.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source grocery procurements. However, the $18.1 million expenditure for a 91-day delivery order of miscellaneous groceries, particularly when procured on a non-competitive basis, suggests a potentially inflated per-unit cost. The lack of competitive bidding prevents an assessment of whether the government received fair market value. Without more data on the specific items procured and their market prices, it's difficult to definitively state if this was a good deal, but the circumstances lean towards questionable value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' basis, indicating that the Defense Commissary Agency did not solicit bids from multiple vendors. This typically occurs when a specific product or service is only available from a single source, or in urgent situations where competition is impractical. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium for these groceries due to the absence of competitive bidding. The government did not leverage market competition to secure the lowest possible prices.

Public Impact

Military personnel and their families stationed in Illinois benefit from access to commissary groceries. The contract ensures the availability of miscellaneous grocery items, contributing to the morale and well-being of service members. The geographic impact is limited to the state of Illinois, where the delivery orders were fulfilled. The contract supports the wholesale grocery distribution sector, albeit through a single supplier.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits price negotiation and potentially increases costs for taxpayers.
Short contract duration (91 days) may indicate reactive procurement rather than strategic planning.
Lack of transparency in the sole-source justification process.
No indication of small business involvement, missing opportunities for economic inclusion.

Positive Signals

Ensures availability of essential grocery items for military families.
Fixed-price contract provides some cost predictability for the awarded amount.
Procurement supports a known supplier, potentially ensuring product availability.

Sector Analysis

The grocery wholesale industry is a mature sector characterized by large distributors and manufacturers. Federal spending in this area, particularly through agencies like the Defense Commissary Agency, supports the logistical needs of military installations. While this specific contract is a sole-source award for miscellaneous items, broader federal spending on food and grocery products involves extensive competitive bidding processes across various categories. The market size for grocery wholesale is substantial, with numerous players, making the non-competitive nature of this award notable.

Small Business Impact

This contract does not appear to have involved any small business set-asides, nor is there any indication of subcontracting opportunities for small businesses. The award was made directly to Quaker Oats Company, a large corporation. This suggests that the procurement did not actively seek to engage or support the small business ecosystem in this instance, missing an opportunity to foster economic participation.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Commissary Agency's contracting officers and potentially the Department of Defense Inspector General. However, the 'NOT AVAILABLE FOR COMPETITION' nature of the award limits the scope for robust oversight related to price competition. Transparency is reduced due to the lack of a competitive bidding process. Accountability would focus on ensuring the goods delivered meet specifications and the terms of the fixed-price contract are adhered to.

Related Government Programs

Defense Commissary Agency Operations
Commissary Resale Program
Wholesale Grocery Distribution
Department of Defense Food Procurement

Risk Flags

Non-competitive award
Potential for inflated pricing
Lack of transparency in justification
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.1 million to QUAKER OATS COMPANY, THE. RESALE - MISCELLANEOUS GROCERY

Who is the contractor on this award?

The obligated recipient is QUAKER OATS COMPANY, THE.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Commissary Agency).

What is the total obligated amount?

The obligated amount is $18.1 million.

What is the period of performance?

Start: 2010-07-01. End: 2010-09-30.

What specific grocery items were procured under this contract, and what was the justification for the sole-source award?

The contract data indicates 'RESALE - MISCELLANEOUS GROCERY' as the description, suggesting a broad range of food and household items intended for resale. The justification for the 'NOT AVAILABLE FOR COMPETITION' award is not detailed in the provided data. Typically, sole-source justifications are based on factors such as the unique capability of a single contractor, urgent and compelling needs where competition is impractical, or when only one responsible source exists. Without further documentation, the specific reason remains unclear, but it implies that the Defense Commissary Agency determined that soliciting bids from multiple vendors was not feasible or appropriate for this particular procurement.

How does the $18.1 million expenditure for a 91-day period compare to typical spending for similar grocery contracts?

Comparing this $18.1 million expenditure for a 91-day period is difficult without access to specific, comparable contract data, especially for sole-source awards. However, on an annualized basis, this would equate to approximately $72.56 million ($18.1M / 91 days * 365 days). This figure seems substantial for 'miscellaneous groceries' over a short period, particularly when procured non-competitively. Typical commissary operations involve significant volume, but the lack of competitive bidding means this figure cannot be benchmarked against market rates effectively. It raises a flag for potential overpricing or an unusually large, specific need during that quarter.

What are the potential risks associated with awarding a large grocery contract on a non-competitive basis?

The primary risk of a non-competitive award is the lack of price competition, which can lead to the government paying significantly more than necessary. Without bids from multiple suppliers, there is no market pressure to drive down prices. This can result in inflated costs for taxpayers. Other risks include reduced innovation, as contractors may not feel compelled to offer better solutions or products, and a potential decrease in quality if the contractor knows they are the only option. Furthermore, it can create a perception of favoritism or inefficiency within the procurement process, potentially undermining public trust.

What was the track record of Quaker Oats Company with the Defense Commissary Agency prior to or following this contract?

The provided data indicates this contract was awarded on July 1, 2010, with an end date of September 30, 2010. To assess Quaker Oats Company's track record, one would need to examine their contract history with the Defense Commissary Agency (DECA) and the broader Department of Defense (DoD) over a longer period. This would involve looking at the number of contracts awarded, their value, performance ratings, and whether they were competitively or non-competitively sourced. Without this broader historical data, it's impossible to definitively characterize their overall track record based solely on this single, short-term, non-competitive delivery order.

How does this contract fit into the overall spending patterns for grocery and food supplies within the Department of Defense?

This $18.1 million contract represents a portion of the DoD's overall spending on food and grocery supplies, which is a significant category supporting military personnel and their families globally. The Defense Commissary Agency (DECA) manages a large resale program, procuring a vast array of products. While DECA typically aims for competitive procurement to achieve economies of scale, individual contracts like this one, especially if for specialized or urgent needs, might be awarded differently. This specific contract's non-competitive nature and focus on 'miscellaneous grocery' suggests it might be filling a gap or addressing a specific, time-sensitive requirement rather than representing a standard, large-scale procurement strategy for the entire grocery supply chain.

Industry Classification

NAICS: Wholesale Trade › Grocery and Related Product Merchant Wholesalers › General Line Grocery Merchant Wholesalers

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Pepsico, Inc. (UEI: 001287762)

Address: 555 W MONROE ST, CHICAGO, IL, 60661

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,142,914

Exercised Options: $18,142,914

Current Obligation: $18,142,914

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3799

IDV Type: IDC

Timeline